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FORM 10-Q/A
Amendment No. 1
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-28362
ClearComm, L.P.
(Exact name of registrant as specified in its charter)
Delaware
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66-0514434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
620 Broadway 95476
Sonoma, California (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (707) 938-2428
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 2,825.9 Units of Limited
PARTNERSHIP INTEREST
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ClearComm, L.P.
INDEX
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<CAPTION>
PAGE NO.
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Assets, Liabilities
and Partners' Capital as of March 31, 1998
(unaudited) and December 31, 1997....................................... 3
Consolidated Statement of Revenues and Expenses
For the three months ended March 31, 1998 and 1997
and period from January 24, 1995 (inception) to
March 31, 1998 (unaudited).............................................. 4
Consolidated Statement of Cash Flows for the three
Months ended March 31, 1998 and 1997 and
period from January 24, 1995 (inception) to
March 31, 1998 (unaudited).............................................. 5
Consolidated Statement of Changes in Partners' Capital
Accounts from inception on January 24, 1995 through
March 31, 1998 (unaudited).............................................. 6
Notes to the Interim Consolidated Financial Statements.................. 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations...................... 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings..................................................... 9
Item 6. Exhibits and Reports on Form 8-K...................................... 9
Signatures....................................................................... 10
Exhibit Index.................................................................... 11
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2
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ClearComm, L.P.
(a development stage enterprise)
CONSOLIDATED STATEMENT OF ASSETS, LIABILITIES
AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
MARCH 31,
1998 DECEMBER 31,
(UNAUDITED) 1997
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ASSETS
Current assets:
Cash and cash equivalents.................................. $ 8,190,645 $ 9,761,729
Prepaid expenses........................................... 72,673 108,700
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Total current assets..................................... 8,263,318 9,870,429
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Licenses, including capitalized interest of $32,502,000 in
1998 and $25,672,000 in 1997............................... 277,074,801 270,245,139
Deposits..................................................... 25,000 25,000
Equipment, net............................................... 103,017 80,258
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Total assets............................................. $ 285,466,136 $ 280,220,826
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LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable and accrued liabilities................... $ 961,612 $ 1,195,145
Accounts payable for legal fees, including $69,324--1998
and $63,329--1997 to related parties..................... 393,139 184,257
Accounts payable to related parties........................ 621,172 690,118
Accrued interest--FCC currently payable.................... 8,997,989 4,399,837
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Total current liabilities................................ 10,973,912 6,469,357
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Long term liabilities:
Notes payable--FCC......................................... 218,650,852 216,856,476
Accrued interest--FCC notes................................ 14,996,648 14,559,513
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Total long term liabilities.............................. 233,647,500 231,415,989
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Limited partners' capital 2,825.9 units in 1997 and 1998;
issued and outstanding..................................... 70,969,000 70,969,000
General partner's capital.................................... 100,000 100,000
Undistributed losses accumulated during development stage.... (30,224,276) (28,733,520)
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Total partners' capital.................................. 40,844,724 42,335,480
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Total liabilities and partners' capital.................. $ 285,466,136 $ 280,220,826
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</TABLE>
The accompanying notes are integral part of these statements.
3
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ClearComm, L.P.
(a development stage enterprise)
CONSOLIDATED STATEMENT OF REVENUES AND EXPENSES
(Unaudited)
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<CAPTION>
THREE MONTHS ENDED CUMULATIVE
MARCH 31, FROM INCEPTION
---------------------------- THRU MARCH 31,
1998 1997 1998
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<S> <C> <C> <C>
Revenues:
Interest Income..................................................... $ 107,770 $ 109,707 $ 2,139,250
Expenses:
Consulting and legal services rendered by related parties........... 235,562 7,213,023 16,028,166
General and administrative services billed by the General Partner... 81,054 102,114 1,388,319
Other legal fees.................................................... 359,498 403,204 3,558,445
Consulting services................................................. 278,502 585,495 2,667,769
Insurance........................................................... 32,500 31,721 328,616
Travel.............................................................. 131,127 67,208 953,915
Salaries and bonuses................................................ 331,494 1,062,322
Other administrative expenses....................................... 148,789 49,882 844,829
Bid withdrawals and forfeiture imposed by the FCC................... 5,531,145
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Total expenses.................................................... 1,598,526 8,452,647 32,363,526
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Net loss............................................................ ($ 1,490,756) ($ 8,342,940) ($ 30,224,276)
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Net loss attributable to general partner............................ (372,689) (2,085,735)
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Net loss attributable to limited partner............................ (1,118,067) (6,257,205)
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Net loss per limited partner unit................................... ($ 395.65) ($ 2,266.12)
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Weighted average number of Limited Partnership units outstanding
during the period................................................. 2,825.9 2,761.2
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</TABLE>
The accompanying notes are integral part of these statements.
4
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ClearComm, L.P.
(a development stage enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED CUMULATIVE
MARCH 31, FROM INCEPTION
----------------------------- THRU MARCH 31
1998 1997 1998
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<S> <C> <C> <C>
Cash flows from operating activities
Net Loss.......................................................... ($ 1,490,756) ($ 8,342,940) ($ 30,224,276)
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Adjustments to reconcile the net loss for the period to net cash
used by operating activities:
Depreciation.................................................... 11,580 908 37,772
(Increase) decrease in prepaid expenses......................... 36,027 31,780 (72,674)
Increase in deposit............................................. (25,000) (25,000)
Decrease in payable to the FCC.................................. (1,000,000)
Increase (decrease) in accounts payable and accrued liabilities. (233,533) 97,747 961,612
(Decrease) increase in accounts payable:
General Partner................................................. (68,946) (37,886) 621,172
Legal fees...................................................... 208,882 235,065 393,139
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Total adjustments........................................... (45,990) (697,386) 1,916,021
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Net cash used by operating activities......................... (1,536,746) (9,040,326) (28,308,255)
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Cash flows from investing activities:
FCC auction deposit returned (paid)............................. 11,039,542 (38,960,457)
Bid withdrawal payment.......................................... 4,531,145
Equipment....................................................... (34,338) (140,788)
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Net cash provided (used) by investing activities.............. (34,338) 11,039,542 (34,570,100)
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Cash flows from financing activities:
Capital investment by partners.................................. 1,040,000 71,144,000
Capital repurchased from partners............................... (75,000)
Restricted cash................................................. 6,511,250
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Net cash provided by financing activities..................... 7,551,250 71,069,000
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Net increase (decrease) in cash and cash equivalents.............. (1,571,084) 9,550,466 8,190,645
Cash and cash equivalents at:
Beginning of the period......................................... 9,761,729 2,492,851
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End of the period............................................... $ 8,190,645 $ 12,043,317 $ 8,190,645
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Supplemental cash flow disclosures:
Capitalization of interest not paid............................. $ 6,830,000 $ 5,089,500 $ 32,502,000
Acquisition of licenses with notes payable to FCC............... $ 210,143,476 $ 210,143,476
</TABLE>
The accompanying notes are integral part of these statements.
5
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ClearComm, L.P.
(a development stage enterprise)
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL ACCOUNTS
(Unaudited)
For The Period From Inception on January 24, 1995 through March 31, 1998
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<CAPTION>
LIMITED
GENERAL LIMITED PARTNERS
PARTNER PARTNERS TOTAL UNITS
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<S> <C> <C> <C> <C>
Capital invested.................................... $ 100,000 $ 65,112,500 $ 65,212,500 2,604.5 units
1995 share of undistributed losses.................. (1,678,592) (5,035,774) (6,714,366)
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Capital account balance (deficit) at December 31,
1995.............................................. (1,578,592) 60,076,726 58,498,134 2,604.5 units
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Repurchase of Limited Partners units................ (75,000) (75,000) (3.0) units
Capital contributed during 1996..................... 2,952,500 2,952,500 118.1 units
1996 share of undistributed losses.................. (2,268,712) (6,806,135) (9,074,847)
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Capital account balance (deficit) at December 31,
1996.............................................. (3,847,304) 56,148,091 52,300,787 2,719.6 units
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Capital contributed during 1997..................... 2,979,000 2,979,000 106.3 units
1997 share of undistributed losses.................. (3,236,077) (9,708,230) (12,944,307)
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Capital account balance (deficit) at December 31,
1997.............................................. (7,083,381) 49,418,861 42,335,480 2,825.9 units
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First quarter 1998 share of undistributed losses.... (372,689) (1,118,067) (1,490,756)
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Capital account balance (deficit) at March 31,
1998.............................................. (7,456,070) 48,300,794 40,844,724 2,825.9 units
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6
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions for Form 10-Q. Additional
information regarding the financial statements can be found in the Notes to
Consolidated Financial Statements for the year ended December 31, 1997
included in the 1997 Form 10-K.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (principally consisting of
normal recurring accruals) necessary for a fair presentation of the financial
condition as of March 31, 1998 and December 31, 1997, and the results of
operations and changes in its cash flows for the three months ended March 31,
1998 and 1997 and from January 24, 1995 (inception) to March 31, 1998.
NET LOSS PER LIMITED PARTNERSHIP UNIT
Net loss per limited partnership unit is computed by dividing net loss
for the period by the weighted-average number of limited partnership units
outstanding during the period. The weighted-average number of limited
partnership units outstanding during the three months period ended March 31,
1998 and 1997 was approximately 2,825.9 and 2,761.2 respectively.
3. CONTINGENCY
On April 6, 1998 the Circuit Court of the State of Oregon dismissed a
suit filed by certain limited partners of the Partnership against the
Partnership, the General Partner, certain of their officers, directors,
employees and consultants. The suit alleges that defendants employed
misstatements and omissions of fact in connection with the sale of limited
partnership units of the Partnership and seeking the return of their
investment plus interest and attorney fees. The plaintiffs have filed a
motion to abate order which seeks to clarify the court's order.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Partnership was formed in January 1995 and is managed by the General
Partner. The Partnership was organized to acquire, own and operate personal
communication services PCS licenses in frequency Block C and to take
advantage of the benefits that the FCC has set aside for Entrepreneurs. The
Partnership's income to date has consisted only of interest earnings as the
Partnership was awarded the Licenses on January 22, 1997 and has not yet
established operations.
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1998 COMPARED WITH QUARTER ENDED MARCH 31, 1997
REVENUES
The Partnership's sole source of revenue for the quarter ended March 31, 1998
continued to be interest income. Interest income for this quarter was
$107,770. In the first quarter of 1997, the Partnership had interest earnings
of $109,707.
EXPENSES
Expenses for the quarter ended March 31, 1998 totaled $1,598,526 expenses for
the same period in 1997 amounted to $8,452,647. The Partnership's expenses in
the first quarter of 1997 were greater than the first quarter of 1998. The
expenses for the first quarter of 1997 included the $6,511,250 advanced to
Romulus Telecommunications, Inc. ("Romulus") under the Services Agreement,
pursuant to which Romulus had assisted the Partnership in obtaining its
licenses. The Partnership has filed a suit attaching the $6,511,250 deposited
in an escrow account in connection with its efforts to recover the costs,
penalties and fines which were incurred as a result of the bidding error in
the Norfolk, Virginia market. In addition, during the first quarter of 1998
there has been a reduction in legal fees compared with the same period of
1997 because the litigation the Partnership is engaged is at an advanced
stage and some issues have been satisfactorily resolved.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Partnership had assets totaling $285,466,136
consisting of $8,190,645 in cash and cash equivalents, $72,673 in prepaid
expenses, $25,000 on deposit, $277,074,801 of PCS licenses, including
$32,502,000 in capitalized interest $103,017 in equipment and current
liabilities of $10,973,912 and long term liabilities due to the FCC including
accrued interest of $233,647,500. In addition, the Partnership is continuing
to seek additional capital for purposes of developing the licenses. The
Partnership's efforts to raise additional capital to develop licenses is
dependent upon whether the Partnership retains any of the licenses. Failure
to retain its licenses or the failure to prevail in the litigation to which
the Partnership is subject will have a material adverse effect on the
Partnership's business and operations. Although no assurance can be made, the
Partnership expects to raise the additional amounts it needs to develop the
licenses it retains. The Partnership currently estimates that, if it elects
not to utilize any of the options contained in the Reconsideration Order, it
will need to raise approximately $290 million over the next three years to
develop all of the Licenses. In addition, the Partnership owes the federal
government approximately $309,863,813 plus accrued interest at 6.5% of
$23,994,637 in connection with the acquisition of the Licenses. At March 31,
1998, the notes payable to the FCC are presented net of a discount of
approximately $91,213,000.
8
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PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership is subject to certain legal proceedings and FCC
proceedings which were described in the Partnership's Form 10-K for the year
ended December 31, 1997 (the "1997 Form 10-K").
As previously reported in the Partnership's 1997 Form 10-K, on January 27,
1997, the trustee of the SDE Trust filed a complaint for damages of $300
million and equitable relief against Unicom Corporation, the former General
Partner ("Unicom"), SuperTel Communications Corp., the General Partner
("SuperTel"), the Partnership and certain officers and directors, trustees of
trusts holding Unicom shares and attorneys. In an order dated July 21, 1997,
the Judge granted the Company's motion to move this case to Puerto Rico. The
SDE Trust filed an appeal with the California Court of Appeals on April 28,
1998, and the Company's response is due on July 23, 1998.
As previously reported in the Partnership's 1997 Form 10-K, two separate
civil actions were filed in the Circuit Court of the State of Oregon for
Multnomah County in November 1996 and August 1997 that have now been
consolidated for all purposes. In February 1998, the court dismissed the
racketeering claim and on April 6, 1998, dismissed the other claims on grounds
of improper forum. The plaintiffs filed a motion to abate order which seeks to
clarify the court's order.
As previously reported in the Partnership's 1997 Form 10-K, the Company
obtained a stay of the Romulus and Easton arbitration proceedings. The order
of the U.S. Federal District Court for the Commonwealth of Puerto Rico
staying the proceedings has been appealed to the U.S. Court of Appeals for
the First Circuit.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits 27.0 Financial Data Schedule
(b) No reports of Form 8-K were filed by the Partnership during the
quarter ended March 31, 1998.
ITEMS 2, 3, 4 and 5 are not applicable have been omitted.
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ClearComm, L.P.
By: SuperTel Communications Corp.
By: /s/ Javier O. Lamoso
-------------------------------
Name: Javier O. Lamoso
Title: Executive Vice President
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 8,191
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,263
<PP&E> 103
<DEPRECIATION> 0
<TOTAL-ASSETS> 285,466
<CURRENT-LIABILITIES> 10,974
<BONDS> 233,648
0
0
<COMMON> 71,069
<OTHER-SE> (30,224)
<TOTAL-LIABILITY-AND-EQUITY> 285,466
<SALES> 0
<TOTAL-REVENUES> 108
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,599
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,491)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,491)
<EPS-PRIMARY> (396)
<EPS-DILUTED> (527)
</TABLE>